M/S. Wave Industries Pvt. Ltd vs Cce, Meerut-Ii

[Arising out of Order-in-Appeal No.MRT/EXCUS/ 002/ APP/ 15/ 14-15 dated 08.05.2014 passed by the Commissioner (Appeals), Customs, Central Excise and Service Tax, Meerut-II]

For approval and signature:

HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

M/s. Wave Industries Pvt. Ltd. Appellant

Vs.

CCE, Meerut-II  Respondent

Present for the Appellant : Shri Alok Arora, Advocate

Ms. Rinky Arora, Advocate

Present for the Respondent: Shri.M.S. Negi, D.R.

Coram: HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)

Date of Hearing/Decision: 30.06.2015

FINAL ORDER NO. 53897/2015

PER: S.K. MOHANTY

The brief facts of the case are that the appellant is a manufacturer of V.P. sugar falling under Tariff Heading 1701 of the Central Excise Tariff Act, 1985. On 9th January, 2012, a team of Central Excise Officers visited the factory premises of the appellant and conducted physical verification of stock of the finished goods. During the course of stock taking, shortage of 2505.50 quintals was detected by the Officers. Subsequently, the department initiated show cause proceedings for recovery of the central excise duty attributable to the shortage quantity of the finished goods, which culminated in the adjudication order dated 19.12.2013, wherein Central Excise Duty demand of Rs.2,45,163/- was confirmed alongwith interest and equal amount of penalty was imposed on the appellant. In appeal against the adjudication order, the Commissioner (Appeals), Central Excise, Meerut has upheld confirmation of the adjudged demand. Hence, the present appeal before this Tribunal.

2. The ld. Advocate Shri Aalok Arora appearing for the appellant submits that the shortage in stock of sugar arrived at by the Officers during the course of verification of the records in the factory on 9th January, 2012 relates to the production for the same day up to 21 Hrs., which is evident from the Panchnama duly signed by the Central Excise Officers. He further submits that on the very next day i.e. on 10th January, 2012, the appellant had intimated the Jurisdictional Assistant Commissioner of Central Excise that the stock of sugar was lying in 5 sugar Godowns and the Godowns are located within the factorys premises; that the appellant were having stocks of sugar of season 2008-09, 2010-11 and current year 2011-12; that there were some quantity of torn bags of sugar lying in Godown which has occurred during handling of sugar in Godowns and there is seepage also in Godowns. On the basis of such explanation, the appellant requested the jurisdictional Central Excise Authorities to order the re-verification of stock, as there was no shortage in the stock position as reflected in the Panchnama. The ld. Advocate further submits that during the disputed period, the appellant was maintaining the daily stock account wherein the details of production and clearances of the finished goods had been reflected, which is evident from the fact that the opening balance reflected in the Panchnama is tallying with the opening balance indicated in the RG-I Register maintained by the appellant. Thus, according to the ld. Advocate, since on clearance of the final product from the factory, appropriate central excise duty liability has been discharged, demand of the adjudged amount in the adjudication order and confirmed in the impugned order will amount to double taxation, which has no legal sanctity. He, accordingly, prayed for quashing the duty demand confirmed by the authorities below and also to waive the penalty imposed in the adjudication order.

3. Per contra, the ld. D.R. Shri M.S. Negi appearing for the respondent submits that during the course of stock taking of the finished goods, the representative of the appellant had admitted the shortage. He further submits that since because there was no shortage of stock in the previous two years, the shortage in the current year which has been detected by the Central Excise Officers proves beyond any shadow doubt that the goods have been clandestinely removed by the appellant, on which confirmation of the duty demand and imposition of penalty in the adjudication/impugned order are justified.

4. Heard the ld. Counsels for both the sides and perused the records.

5. Demand of duty has been confirmed with reference to shortages of sugar arrived at during visit of officers on 09.01.2012. The appellants pleaded that during visit of Central Excise Officers the production in the factory was going-on and there were disturbed stacking of sugar in godowns and at some places there were torn bags and seepage also lying in the godown for which the appellant vide letter dated 10.01.2012 informed the jurisdictional Assistant Commissioner, Central Excise. I have also gone through the RG-I stock of sugar as on 09.01.2012 (100 Kg. bag page 64 of appeal Memo and stock of 50 Kg. bag at page 50 of appeal memo which was as per book balance). The appellant took the production & clearance from 09.01.2012 onwards from the said book balance. Had it been so, there is no shortage of sugar and there would be no demand of duty. For verification of this factual aspect, the matter is remanded to the Original Adjudicating Authority for verification from records. In case the appellant plea is found correct there would be no demand of duty. However, for not maintaining the stock of sugar properly, I am of the view that penalty can be imposed on the appellant. Thus, considering the overall facts and circumstances, the penalty amount is reduced to Rs.5000/- under Rule 25 of Central Excise Rules, 2002. The appeal is partly allowed by way of remand as mentioned above

[Dictated and Pronounced in the Open Court.]

(S.K. MOHANTY)

MEMBER (JUDICIAL)

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